In October 2008, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity (MHPAE) Act was passed by the U.S. Congress. This law, implemented in January 2010, is the culmination of a decades-long effort to achieve comprehensive federal parity. Prior to enactment of the MHPAE Act, mental health benefits often included financial requirements (i.e., deductibles, cost sharing) and treatment limits (i.e., number of inpatient days, outpatient visits) that did not apply to medical/surgical benefits. The U.S. Congress aimed to eliminate these differences in insurance coverage with the passage of the MHPAE Act. It is expected to affect insurance coverage for 140 million Americans. Prior to its passage, the most definitive evidence on the effects of parity came from an evaluation of comprehensive parity for in-network benefits in the Federal Employees Health Benefits Program (FEHBP). This study found that parity did not affect total spending on mental health care, but did lower out-of-pocket costs. Some evidence suggests that health plans were able to control spending after parity by more stringently managing mental health benefits. There are a number of critical differences between the MHPAE Act and the FEHBP parity directive that have led health plans and employers to raise concerns that the effects of MHPAE Act might differ from what might have been expected based on the experience of federal employees. We propose to study the effects of federal parity on: 1) total mental health spending and out-of-pocket mental health spending; 2) the probability of mental health service use, and the quantity and price of mental health treatments; 3) use, spending and the mix of providers accessed out-of-network. For Aims 1 and 2, we will use claims data from Aetna health plans to conduct a difference-in-differences analysis to compare changes in spending, utilization patterns and price among individuals newly subject to federal parity under the MHPAE Act with changes among individuals already subject to pre-existing strong parity laws in 8 states. For Aim 3, we will use interrupted time series analysis using national Marketscan data to determine whether OON changes post parity differ from those expected given existing secular trends. The significance of this application lies in our ability to produce new information on this sweeping new policy initiative. It is critical to understand the effects of federal parity on mental health spending, utilization patterns and price, and care obtained OON for a number of reasons. First, beginning in 2014, this policy will be extended to those with individual insurance through state-based exchanges established under the Affordable Care Act (ACA). Our findings could be influential in informing implementation of this provision of the landmark health care reform law. Second, it is important to note that the 42 million individuals working for small businesses are exempt from the parity requirements of both the MHPAE Act and ACA. Findings from this study could provide valuable information on the potential effects of extending federal parity to this population.